The pipelines feeding China's burgeoning economy

Mar 17, 2011 12:00 AM

The world’s most populous nation and the second biggest consumer of energy behind the US, China is set to implement an ambitious project to double the length of its pipeline network within 5 years. Here Pipelines International provides an overview of some of the major pipeline projects proposed or currently under-way.

Despite the 1.3 bn barrel oil and the 85.2 bn cm of natural gas China produced in 2009, the country still requires significant energy imports to meet its domestic consumption needs. A number of gas and oil pipeline projects have been proposed recently and a few are under-way to bring petroleum products from its energy-rich neighbours and to transport oil and natural gas domestically throughout China.

International projectsChina is investing in major international pipeline projects, which will see oil and gas imported from Russia, Central Asia and Myanmar. Construction work continues on the Chinese portion of China National Petroleum Corporation’s (CNPCs) Myanmar – China Pipeline project, after PetroChina commenced works in south-west China’s Yunnan Province in September 2010.

The Myanmar – China Pipeline project involves the construction of an oil pipeline and a gas pipeline running between the 2 countries. The pipelines originate at Kyaukryu port on the west coast of Myanmar and enter China at Yunnan’s border city of Ruili.

The natural gas pipeline will cover a total distance of 2,500 km, including 793 km in Myanmar and 1,727 km in China. The crude oil pipeline will be approximately 2,402 km long, traversing 771 km in Myanmar and 1,631 km in Chinese territory.Construction of the Myanmar section began in June 2010. CNPC and Myanmar Oil and Gas Enterprise have created 2 joint venture companies to develop the project; South-east Asia Oil Pipeline Co and South-east Asia Gas Pipeline Co.

CNPC South-east Asia Co is the controlling party of the joint venture and is in charge of the design, construction, operation, expansion and maintenance of the Myanmar oil and gas pipelines.

The gas pipeline is being constructed as part of an agreement signed between PetroChina and the Burmese junta regarding the supply of 6.5 tcf of natural gas to the People’s Republic of China over a 30 year period. The oil pipeline is being built to improve transit efficiency by eliminating the long detour that oil cargoes take through Malacca Strait. The project is anticipated to be completed in 2013.

Construction has commenced on the Beineu – Bozoi – Shymkent Gas Pipeline, which, although not being constructed within China’s borders, will form part of the Kazakhstan – China Gas Pipeline. The main purpose of the 1,475 km Beineu – Bozoi – Shymkent Gas Pipeline project is to ensure energy security and reliability of gas supply of the southern regions of Kazakhstan and China, through shipments of Kazakh gas from fields in the country’s western regions.

The pipeline runs along the Mangystau, Aktobe, Kyzylorda and South Kazakhstan regions and will interconnect with the first stage of the Kazakhstan – China Pipeline, which runs 1,300 km from the Uzbekistani and Kazakh border to Khorgos, China. The Beineu – Bozoi – Shymkent Gas Pipeline is a joint venture between KazTransGas and CNPC Central Asia Gas Pipeline Co Ltd. The first stage of the Beineu – Bozoi – Shymkent Gas Pipeline is planned to be operational at the end of 2012.

In addition, CNPC President Jiang Jiemin and Uzbekneftegaz Board Chairman Ulugbek Nazarov have signed a framework agreement on the purchase and sale of natural gas. As outlined in the agreement, Uzbekistan will supply 10 bn cm p/y of natural gas to China. The 2 countries will co-operate to connect Uzbekistan’s gas pipeline network to the Uzbekistan – China Gas Pipeline, which is part of the existing 1,800 km Turkmenistan – China Gas Pipeline.

The 964 km Russia – China Oil Pipeline delivered first oil in November 2010, just 2 months after construction works finished on the pipeline that will transport Russian crude to China for the next 20 years. The 32 inch diameter pipeline runs from Skovorodino in Russia’s Far East and enters north-eastern China at Lianyin, Heilongjiang Province. The pipeline crosses 441 km of discontinuous, sporadic and isolated patches of warm permafrost, and 512 km of seasonally frozen ground before reaching Daqing, North-eastern China.China Oil and Gas Pipeline Company and Daqing Oilfield Construction Group were the main construction contractors on the project. The pipeline forms part of the 4,857 km East Siberia Oil (ESO) Pipeline.

Expanding the domestic gas pipeline networkAt the end of 2010, CNPC reported that it owned 90 % of China’s natural gas pipelines. CNPC’s 4 major gas provinces – Tarim, Sichuan, Changqing and Qinghai – produce about 80 % of the nation’s total natural gas, delivering more than 40 bn cm p/y of gas to Sichuan, Chongqing, neighbouring Bohai Bay areas, and the Yangtze and Pearl river deltas through pipelines such as the West – East, Shaan – Jing and Zhongxian – Wuhan gas pipelines. In 2011 work continues on China’s Second West – East Gas Pipeline, one of the largest pipelines currently under construction.

CNPC commenced construction of the $ 23.3 bn project in late 2008. The scope of works involves the construction of 8,704 km of 48 inch diameter gas pipeline, which includes one trunk line and 8 branches that will connect Horgos, in the Xinjian Uygur Autonomous Region, with the Hong Kong Special Administrative Region after traversing 14 provinces, autonomous regions, and municipalities. The trunk pipeline is estimated to cost $ 10.3 bn, while the network is expected to cost $ 13 bn. The trunk-line has been divided into eastern and western sections with Zhongwei, in the Ningxia Hui Autonomous Region, designated as the pipeline’s midpoint.

The western section, running 2,461 km from Horgos to Zhongwei, commenced construction in February 2008 and was completed in January 2010. The western section connects to the Turkmenistan – China Gas Pipeline at Horgos, and also feeds into the 935 km Second Shaan – Jing Gas Pipeline, which runs from Jingbian County in Shaanxi Province in the west to Beijing in the east via Shaanxi, Shanxi and Hebei provinces.

The eastern section, running 2,477 km from Zhongwei to Guangzhou, and with a design pressure of 10 MPa, commenced construction in December 2008 and is expected to be completed in 2011. Once completed, the pipeline will have an annual capacity of 30 bn cm of gas.

CNPC is also planning the Third West – East Gas Pipeline, which will run from the Xinjiang region in north-west China to Guangdong province in the south. This pipeline will run parallel to the Second West – East pipeline as far as Zhongwei in the northern Ningxia region, with the possibility to extend. It will have a preliminary designed transmission capacity is 30 bn cm p/y.

Meanwhile, China’s National Development and Reform Commission (NDRC), has approved construction of the 492 km Changqing – Huhhot natural gas pipeline. The pipeline will consist of a 415 km, 34 inch diameter trunk and a 77 km, 32 inch diameter branch. Construction is scheduled to be completed in November 2011. It is expected to transport natural gas produced in Changqing oilfield to Huhhot, capital city of north China’s Inner Mongolia.

All of the projects are scheduled to be put into operation by the end of 2012. CNPC has also commenced construction of the Gannan Natural Gas Pipeline in China’s Gansu province. The 118 km pipeline will transport gas from Linxia city to Hezuo city, in the southern part of Gansu province. The project is expected to commence operation at the end of 2011.

The third Shaanxi – Beijing Gas Pipeline was completed in December 2010, and put into operation on 4 January 2011. The new pipeline will transport additional 20 mm cmpd of natural gas from north-western China’s Shaanxi Province to Beijing and surrounding areas to ease the shortage of gas supply for winter heating. The 896 km, 40 inch diameter pipeline is capable of delivering 15 bn cm p/y of natural gas.

Constructing China’s oil pipeline infrastructure

Construction continues on the 28 inch diameter Rizhao – Dongming Oil Pipeline, with 270 km of the 462 km pipeline having been welded by the end of January 2011. The Rizhao – Dongming Oil Pipeline will transport crude oil from the Rizhao City in the east of Shandong Province to Dongming, in the west of the province.In Shannxi province, Yanchang Petroleum Group has begun construction of dual crude oil pipelines, which will extend 124 km across Shaanxi province, located in north-west China. The pipeline will transport 11 mm barrels of crude oil produced in Dingbian to Jingbian. The expected investment required for the pipeline is $ 67 mm.

PetroChina is planning to build 3 oil product pipelines to deliver oil products to north-eastern, north-western and southern parts of the Yunnan province. The 3 projects include the Anning–Kunming–Qujing Pipeline, the Anning–Chu xiong–Dali–Baoshan Pipeline and the Anning–Yuxi–Mengzi–Wenshan Pipeline.

An environmental impact study has been completed for the 3 pipelines, with construction expected to commence in 2011. The feedstock for the pipelines will be sourced from a 10 mm ton p/a refinery at Anning city in central Yunnan, construction of which will be completed within the next 3 years.

Pipe laying offshore China

China Offshore Oil Engineering Corporation (COOEC), a unit of China National Offshore Oil Corporation (CNOOC), has launched its first flagship deep-water pipe-lay vessel, the Haiyangshiyou "201". In the second half of 2011, the pipe-lay vessel will be delivered to Husky Energy’s Liwan 13-1 Gas Field in the South China Sea for deep-water pipe-lay duties.

Husky Energy has signed an agreement with CNOOC regarding the development of the Liwan 13-1 Gas Field. CNOOC will construct and operate the shallow-water platform, the approximately 270 km offshore pipeline to shore, and the onshore gas processing plant. First gas from the Liwan 3-1 development is anticipated in late 2013, ramping up through 2014.

COOEC will be the operator of the $ 439 mm Haiyangshiyou 201, which has a lifting capacity of 4000 ton and has the capacity to lay 5 km of sub-sea pipelines per day, during the project. The Haiyangshiyou 201 was built by Jiangsu Rongsheng Heavy Industries, in Rugao city, Jiangsu province.

Meanwhile, CNOOC has approved the project investment and the overall development plan for WZ 6-12 and WZ 12-8 West Oil Fields in Block 22/12 of the Beibu Gulf, offshore China, which includes the construction of an export pipeline.

The development involves targeting potential reserves of 20–40 mm barrel from 2 unmanned well head platforms at the WZ 6-12 and WZ 12-8 West oil fields. Oil will be transported 32 km through CNOOC’s 16 inch pipeline to a storage and export terminal on Weizhou Island.

Engineering design work and bidding for long lead equipment has begun, and first oil production is expected before the end of 2012.

Pipelines in the coldTemperatures in some Chinese provinces can drop as low as -42 degrees Celsius. Operating pipelines in such conditions gives rise to a number of hazards which must be mitigated.

China’s Representative to the International Permafrost Association, Huijun Jin, has worked on the Russia – China Oil Pipeline (RCOP) and says “Pipeline failure due to excessive stresses resulting from oil pressures and frost heave and thaw settlement is one of the greatest concerns for the RCOP in areas affected by frozen ground.

“Extensive frost hazards may affect the safe operation, structural integrity, long-term stability, and eventually the profitability and environmental friendliness of the pipeline system,”Mr Jin says. Pipeline operator CNPC has developed a monitoring and response system to ensure the normal supply of oil and gas along its pipelines during the winter months.

CNPC says it has implemented a severe weather monitoring and alerting system, and in the event of severe weather the inspection of equipment and pipelines is strengthened, safety procedures enhanced and electric heating devices deployed.

Regulating the industry A new law to ensure safer oil and natural gas pipelines has been approved by China’s top legislature at the 15th session of the Standing Committee of the 11th National People’s Congress (NPC).

According to NPC Standing Committee chairman Bangguo Wu, this law sets out “detailed responsibilities for pipeline companies to ensure the safety of oil and natural gas pipelines”. The law, which took effect on October 2010, is the first of its kind to be implemented in China to protect crucial oil and natural gas infrastructure.

Under the new law, construction companies are required to enact safety measures while constructing pipelines, ensure the quality of construction materials, have regular inspections, and place warning signs near pipelines. Mr Wu said that the law would have a positive influence on ensuring the safety of the public and the country’s energy systems.

At the end of 2009, CNPC had a total of 50,652 km of oil and gas pipelines in China including 13,189 km for crude oil, 28,595 km for natural gas and 8,868 km for refined products, accounting for nearly 70 %, 90 % and 50 % of the nation’s total, respectively.